The land of Milk and Honey16 Dec 2023 05:42
FRANCE and Germany are dragging the eurozone into recession while activity is bouncing back in Britain amid hopes of rate cuts next year, according to a series of closely watched surveys.
Business activity in the single currency area shrank again in December, putting output on course to fall at its fastest pace for 11 years this quarter, barring the pandemic. The downturn was led by France, where businesses reported the sharpest reduction in activity in a decade outside the pandemic according to S&P Global’s “flash” purchasing managers’ index (PMI).
Both France and the wider eurozone shrank by 0.1pc in the three months to the end of September, meaning both are now on course to slip into a technical recession, defined as two straight quarters of economic decline.
Germany also likely ended the year in recession after Europe’s largest economy slipped into a deeper decline at the end of the year, S&P Global said. By contrast, Britain’s economy bounced back at the end of the year as activity rose to a six-month high amid “tentative signs” of a revival in demand.
The rise in the S&P Global UK PMI to 51.7 in December from 50.7 was driven by an increase in new orders and a stronger performance in technology and financial services as hopes for lower interest rates increased. Any reading above 50 signals growth. The French equivalent reading was 43.7, while Germany slipped to 46.7.
Tariq Kamal Chaudhry, an economist at Hamburg Commercial Bank, said: “The French economy is sinking into the recession quagmire.”
Chris Williamson, chief business economist at S&P Global, said: “The UK economy continues to dodge recession.”
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